The role of choice of law in national class actions

University of Pennsylvania Law Review

Volumn 156, Issue 6, 2008, Pages 2001-2034

  Silberman, Linda ^a  

^a NEW YORK UNIVERSITY SCHOOL OF LAW   (United States)

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EID: 54549086625     PISSN: 00419907     EISSN: None     Source Type: Journal    
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References (158)

1. 313 U.S. 487 (1941).
2. See In re Simon II Litig., No. 00-5332, 2002 U.S. Dist. LEXIS 25632 (E.D.N.Y. Oct. 22, 2002), modifying 211 F.R.D. 86, 178 (E.D.N.Y. 2002) (illustrating the importance of choice of law in creating a national class), vacated, 407 F.3d 125 (2d Cir. 2005). For an earlier order and opinion on choice of law, see Simon v. Philip Morris, 124 F. Supp. 2d 46, 53-78 (E.D.N.Y. 2000). For a critique of Judge Weinstein's choice of law analysis, see Scott Fruehwald, Individual Justice in Mass Tort Litigation: Judge Jack B. Weinstein on Choice of Law in Mass Tort Cases, 31 HOFSTRA L. REV. 323, 348-59 (2002).
3. I have written elsewhere about the development of the modern class action. See Linda Silberman, The Vicissitudes of the American Class Action - With a Comparative Eye, 7 TUL. J. INT'L & COMP. L. 201 (1999).
4. In general, nonmutual issue preclusion will not attach if the applicable law will be different. See, e.g., Schultz v. Boy Scouts of Am., Inc., 480 N.E.2d 679, 689 (N.Y. 1985).
5. FED. R. CIV. P. 23(b)(3). There are, of course, general requirements for class certification that must be met under Federal Rule 23 and most state class action rules: numerosity, common questions of law or fact, typical claims or defenses by the representative parties, and fair and adequate representation by the named class representative. FED. R. CIV. P. 23(a).
6. FED. R. CIV. P. 23(b)(2) (authorizing class certification where "the party opposing the class has acted or refused to act on grounds generally applicable to the class").
7. The Common Sense Product Liability Legal Reform Act of 1995, H.R. 956, 104th Cong. (1995).
8. See In re "Agent Orange" Prod. Liab. Litig., 580 F. Supp. 690, 710 (E.D.N.Y. 1984) ("Given a failure of the legislature and the executive, the federal courts could be expected to step in by creating federal common law to cover a national problem."); Harold L. Korn, Big Cases and Little Cases: Babcock in Perspective, 56 ALB. L. REV. 933, 939 (1993) ("One way out of this morass would be to have federal statutory or common law govern such cases . . . .").
9. Multiparty, Multiforum Jurisdiction Act of 1989: Hearings on H.R. 3406 Before the Subcomm. on Courts, Intellectual Property, and the Administration of Justice of the H. Comm. on the Judiciary, 101st Cong. 1-2 (1989);
10. see also Michael H. Gottesman, Draining the Dismal Swamp: The Case for Federal Choice of Law Statutes, 80 GEO. L.J. 1, 2 (1991).
11. See, e.g., ALI, COMPLEX LITIGATION: STATUTORY RECOMMENDATIONS AND ANALYSIS § 6.01(a) (1994) [Mass Torts].
12. 28 U.S.C. § 1369 (Supp. V 2005).
13. See, e.g., In re Air Crash Disaster Near Chicago, Ill., 644 F.2d 594, 610-32 (7th Cir. 1981) (sorting out choice of law questions in a consolidated wrongful death suit where some possible fora allowed for punitive damages and others did not). In cases transferred to Illinois (the situs of the crash) from numerous states (California, New York, Michigan, Puerto Rico, and Hawaii), the Seventh Circuit found that application of the different choice of law rules of the states in which each action had been filed all pointed to using the law of Illinois, the place of injury. For example, Professors Athur Miller and Samuel Issacharoff consulted on an amendment to require federal courts to apply the law of the state where the principal class action defendant resides. See Legal Experts Enter Class Action Debate, Meet with Senate Staff To Discuss Bill, 72 U.S.L.W. 2446, 2446 (Feb. 3, 2004). During the debate in the Senate on February 9, 2005, Senator John Bingaman stated that he had "prepared an amendment that would have reaffirmed the discretionary authority of a judge to select the law of one State" in order to permit "certification for large multistate consumer class actions," but instead of formally proposing its adoption, he would lend his support to a different amendment proposed by Senator Diane Feinstein. See 151 CONG. REC. S1157, S1167 (Daily ed. Feb. 9, 2005).
14. Senator Feinstein's proposed floor amendment was entitled "Choice of State Law in Interstate Class Actions" and, among other things, would have instructed district courts: (1) not to deny class certification on the ground that the law of more than one state would be applied; (2) to use subclasses wherever possible; and (3) if subclasses were impracticable, to ensure that "plaintiffs' State laws" were applied. See id. at S1166. For further discussion of the amendment by the proponents and the responses to it, see David Marcus, Erie, the Class Action Fairness Act, and Some Federalism Implications of Diversity Jurisdiction, 48 WM. & MARY L. REV. 1247, 1308-10 (2007).
15. 472 U.S. 797 (1985).
16. Shutts v. Phillips Petroleum Co., 679 P.2d 1159, 1181 (Kan. 1984).
17. Shutts, 472 U.S. at 822.
18. Id. at 821.
19. Shutts v. Phillips Petroleum Co., 732 P.2d 1286, 1292 (Kan. 1987).
20. The argument that Kansas had unconstitutionally distorted the interpretation of other states' laws was presented to the Supreme Court in Sun Oil Co. v. Wortman, 486 U.S. 717 (1988), but the Court refused to review that aspect of the case, id. at 730-31. Justice O'Connor dissented on that point and observed that the result was the same as avoiding application of the law of a particular state. Id. at 744 (O'Connor, J., dissenting). She wrote that a court could "invent a legal theory so novel or strange that the other State has never had an opportunity to reject it; then, on the basis of nothing but unsupported speculation, 'predict' that the other State would adopt the theory if it had the chance." Id. at 749.
21. See, e.g., LA. CIV. CODE ANN. art. 3515-3556 (2007) (originally enacted in 1991, effective 1992).
22. RESTATEMENT OF CONFLICT OF LAWS (1934).
23. EUGENE F. SCOLES ET AL., CONFLICT OF LAWS 84-98 (4th ed. 2004).
24. RESTATEMENT (SECOND) OF CONFLICT OF LAWS (1969).
25. See SCOLES ET AL., supra note 22, at 98-105.
26. Id. at 103-05.
27. See discussion infra text accompanying notes 76-97.
28. See Spence v. Glock, 227 F.3d 308, 310-11 (5th Cir. 2000). Indeed, that approach has been criticized by some. See, e.g., Patrick Woolley, Erie and Choice of Law after the Class Action Fairness Act, 80 TUL. L. REV. 1723, 1741 (2006) ("Federal courts sitting in diversity have . . . conflat[ed] the choice-of-law burden with the certification burden.").
29. 807 F.2d 1000 (D.C. Cir. 1986). The suit was based on a federal statute, Magnuson-Moss, 15 U.S.C. § 2301-12, which incorporates state law on breach of warranty, so the court was in fact using a federal choice of law rule in determining that laws of different states were applicable to class members' claims. Id. at 1015-16.
30. Id. at 1016 (quoting JAMES J. WHITE & ROBERT S. SUMMERS, UNIFORM COMMERCIAL CODE (2d ed. 1980)).
31. Id. at 1017 (quoting In re Asbestos School Litig., 789 F.2d 996, 1010 (3d Cir. 1986)).
32. 51 F.3d 1293, 1298-1303 (7th Cir. 1995) (citing settlement pressures, choice of law, and bifurcation as reasons for denying certification).
33. Id. at 1300.
34. Id. at 1301 (citations and internal quotation marks omitted).
35. 288 F.3d 1012 (7th Cir. 2002).
36. In re Bridgestone/Firestone, Inc. Tires Prods. Liab. Litig., 205 F.R.D. 503, 511-13 (S.D. Ind. 2001).
37. In re Bridgestone/Firestone, Inc. Tires Prods. Liab. Litig., 288 F.3d at 1016 (7th Cir. 2002).
38. Id. at 1018.
39. Id. at 1020.
40. Id. (citation omitted) (quoting In re Rhone-Poulenc Rorer Inc., 51 F.3d 1293, 1299 (7th Cir. 1995)).
41. See, e.g., In re Gen. Motors Corp. Dex-Cool Prods. Liab. Litig., 241 F.R.D. 305, 315-24 (S.D. Ill. 2007) (determining that the application of the laws of forty-seven states defeats "predominance" and "manageability").
42. 484 F.3d 717 (5th Cir. 2007).
43. Id. at 724.
44. Id. at 725-30 (quoting Cole v. Gen. Motors Corp., No. 01-0123, 2005 WL 1861960, at *8 (W.D. La. Aug. 4, 2005)).
45. Id. at 728.
46. Id. (internal quotation marks omitted).
47. That point was made explicitly in a footnote in Castano v. American Tobacco Co., 84 F.3d 734, 746 n.21 (5th Cir. 1996): Reading [R]ule 23(c) (4) as allowing a court to sever issues until the remaining common issue predominates over the remaining individual issues would eviscerate the predominance requirement of [R]ule 23(b)(3); the result would be automatic certification in every case where there is a common issue, a result that could not have been intended. Note that the restyled Federal Rules address issue classes in a separate provision, Federal Rule 23(c)(4), whereas under the former rules the provision was Rule 23(c)(4)(A) with 23(c)(4)(B) covering subclasses (now 23(c)(5)).
48. 241 F.R.D. 305, 314 (S.D. Ill. 2007).
49. 461 F.3d 219 (2d Cir. 2006).
50. Id. at 226. For more on the conflicting views with respect to "issue certification," compare Laura J. Hines, The Dangerous Allure of the Issue Class Action, 79 IND. L.J. 567, 586-88 (2004),
51. arguing that a class action must meet all of the 23(b)(3) requirements before it can be divided into issue classes, with Elizabeth J. Cabraser, The Class Action Counterreformation, 57 STAN. L. REV. 1475, 1499 (2005), stating that "[I]ssue[s] proposed for class treatment [need only] be of 'central' importance to the disposition of the case." Attention to the "issue class" has also been a theme in the American Law Institute project on Principles of the Law of Aggregate Litigation. See ALI, PRINCIPLES OF THE LAW OF AGGREGATE LITIGATION § 2.02 (Tentative Draft No. 1, Apr. 7, 2008).
52. In re Simon II Litig., No. 00-5332, 2002 U.S. Dist. LEXIS 25632, at *319 (E.D.N.Y. Oct. 22, 2002).
53. Plaintiffs chose to bring a limited-fund class action for punitive damages and to forego an opt-out class action for compensatory damages. See id., at *23-26; see also In re Simon II Litig., 211 F.R.D. 86, 99-101 (E.D.N.Y. 2002), vacated, 407 F.3d 125, 137-38 (2d Cir. 2005).
54. In re Simon II Litig., 2002 U.S. Dist. LEXIS 25632, at *235.
55. Id. at *252.
56. Id. at *260-63.
57. See Neumeier v. Kuehner, 286 N.E.2d 454, 457-58 (N.Y. 1972). The Neumeier rules are usually cited as reflecting the approach to choice of law taken by the New York Court of Appeals.
58. In re Simon II Litig., 2002 U.S. Dist. LEXIS 25632, at *258, *275-76. The Second Circuit did in fact overturn Judge Weinstein's certification of the class, but the Court of Appeals did not address the choice of law issue. The court held that the action could not be certified as a mandatory limited fund class because the plaintiffs did not demonstrate either the upper limit or insufficiency of the posited fund such that individual plaintiffs would be prejudiced if left to pursue separate actions. In re Simon II Litig., 407 F.3d 125, 138 (2d Cir. 2005).
59. 241 F.R.D. 85, 91 (D. Mass. 2007).
60. For an example of how subclassing may avoid choice of law difficulties in the context of a medical monitoring class for injunctive and declaratory relief under Federal Rule of Civil Procedure 23(b)(2), see In re Welding Fume Prods. Liab. Litig., 245 F.R.D. 279, 293-94 (N.D. Ohio 2007).
61. 431 F. Supp. 2d 847 (N.D. Ill. 2006).
62. Id. at 872 (internal quotation marks omitted).
63. 245 F.R.D. 226 (E.D. Pa. 2007). For another example, see Grove v. Principal Mutual Life Insurance Co., 14 F. Supp. 2d 1101, 1106-07 (S.D. Iowa 1998), which applied the law of the defendant's principal place of business to nationwide class claims for fraud and misrepresentation in marketing of life insurance policies.
64. Powers, 245 F.R.D. at 232. The court explained its reasoning as follows: After weighing the factors . . . , the balance tilts in favor of applying Pennsylvania law. Pennsylvania has the most significant relationship to the transaction and the parties. It is the center of the activities that gave rise to the claims. Lycoming is a Pennsylvania manufacturer that has been sued here, where it manufactured the crankshafts and engines. Lycoming issued service bulletins and instructions, communicated orally and in writing about the crankshafts and sent press releases from its headquarters in Pennsylvania, and plans to replace crankshafts here. On the other hand, the contacts with the plaintiffs presumably took place in their home states where they purchased, operate, and moor their aircraft. Yet, considering the mobility of a plane, it could have been purchased and transported from a state other than a plaintiffs home state. Because Lycoming's engines are part of aircraft manufactured by others, it is unlikely that the plaintiffs purchased the aircraft in reliance on anything Lycoming may have represented. Consequently, the place where the false representations were received is not a factor. Id.
65. See infra notes 87-106 and accompanying text.
66. MDL No. 01-1396, 2006 WL 2943154, at *2, *5-7 (D. Minn. Oct. 13, 2006). The district court's certification of the class followed a remand from the Eighth Circuit that reversed an earlier certification for failure to consider the extraterritorial application of Minnesota statutes to a nationwide class and to conduct a thorough conflict of laws analysis. See In re St. Jude Med., Inc., 425 F.3d 1116, 1119-21 (8th Cir. 2005). On remand, the district court conducted a more traditional conflicts analysis and found that Minnesota law should nonetheless apply. The Eighth Circuit reversed the certification a second time on the ground that the common issues did not predominate over individual issues. It did not address the district court's choice of law ruling. See In re St. Jude Med., Inc., No. 06-3860, 2008 WL 942274 (8th Cir. Apr. 9, 2008).
67. In re St. Jude Med., Inc., 2006 WL 2943154, at *6.
68. Id. The court stated that the interests of those states were "furthered through the application of Minnesota law to their citizens because all consumer fraud laws in the nation are designed to protect consumers to some degree." Id. Interestingly, on appeal, the Eighth Circuit reversed the certification of the class because common issues did not predominate, but it did not address the district court's choice of law ruling. See In re St. Jude Med., Inc., 2008 WL 942274.
69. Missing from such an analysis is the fact that different state consumer fraud statutes offer different balances between the rights of consumers and protection for manufacturers. Properly understood, "interest analysis" does not mean that the applicable law is the foreign law because the foreign law benefits the residents of the state with the competing law. A court might properly find that the more protective rule does not apply because the defendant is not a local citizen or resident, and therefore the state has "no interest" in the application of its rule. Alternatively, however, such a protective interest could be furthered when a nonresident defendant conducts business in the state with the greater protection for that party.
70. See David Marcus, supra note 13, at 1282-86 (discussing choice of law rulings by federal judges and noting that, as a consequence of adverse rulings, "plaintiffs' lawyers began to abandon federal courts for state fora").
71. 102 S.W.3d 675 (Tex. 2002).
72. Id. at 684.
73. Id. at 687.
74. Id. at 696-97.
75. Id.
76. Id. at 697.
77. See Lewis Tree Serv., Inc. v. Lucent Techs., Inc., No. 99-8556, 2002 WL 31619027, at *4 (S.D.N.Y. Nov. 20, 2002).
78. 876 N.E.2d 1036 (Ill. App. Ct. 2007).
79. Id. at 1041-44.
80. 135 S.W.3d 657, 661 (Tex. 2004).
81. Id. at 662.
82. Id. at 663.
83. No. 03-0969 (Okla. Dist. Ct. Oct. 26, 2004) (order declaring choice of law), aff'd, No. 102,693 (Okla. Civ. App. Oct. 13, 2006), cert. denied, No. 102,693 (Okla. Mar. 26, 2007). Rulings on the class-certification issue and subsequent appeals in the Oklahoma courts can be found in Compaq's Petition for a Writ of Certiorari in the Supreme Court of the United States (on file with author).
84. That view was based on the recent Supreme Court of Oklahoma decision, Ys-brand v. DaimlerChrysler Corp., 81 P.3d 618 (Okla. 2003), discussed infra note 89 and accompanying text.
85. See supra note 80 and accompanying text.
86. Grider, No. 03-0969 (Okla. Dist. Ct. Oct. 26, 2004).
87. Grider, No. 102,693 (Okla. Civ. App. Oct. 13, 2006).
88. Compaq Computer Corp. v. Grider, 169 L. Ed. 2d 261 (2007).
89. 125 S.W.3d 55 (Tex. App. 2003).
90. Id. at 61-65. Farmers Exchange may not be good law after Compaq and Schein. See, e.g., Nat'l W. Life Ins. Co. v. Rowe, 164 S.W.3d 389, 392-93 (Tex. 2005) (per curiam) (reversing certification of a class where the lower court applied the law of insurance company's principal place of business rather than the law of the insured's domicile in an action brought by purchasers of life insurance policies alleging various claims for tort and breach of contract, and remanding for a detailed analysis of the relevant states' interests); Tracker Marine, L.P. v. Ogle, 108 S.W.3d 349, 356, 363 (Tex. App. 2003) (reversing certification of a nationwide class action brought on behalf of consumers for misrepresentations made by a Missouri manufacturer and indicating that states where the consumers reside have the "most significant interest" in the claims involving fraud and misrepresentation).
91. 81 P.3d 618 (Okla. 2003).
92. Id. at 629.
93. Id. at 624-27.
94. Id. at 626-27.
95. Id. at 627.
96. 164 P.3d 1028, 1033-36 (Okla. 2007).
97. Id.
98. 894 A.2d 1136, 1153-54 (N.J. Super. Ct. App. Div. 2006), rev'd on other grounds, 929 A.2d 1076 (N.J. 2007).
99. Id. at 1147-48.
100. See, e.g., Rowe v. Hoffman-La Roche, Inc., 917 A.2d 767, 772-75 (N.J. 2007) (holding that Michigan's interest in promoting the availability of affordable prescription medication to its citizens outweighed New Jersey's interest in deterring New Jersey corporations from providing inadequate warnings); Deemer v. Silk City Textile Mach. Co., 475 A.2d 648, 651-53 (N.J. Super. Ct. App. Div. 1984) (holding that New Jersey's deterrent interests were outweighed by compensation structure in plaintiff's home state); Heindel v. Pfizer Inc., 381 F. Supp. 2d 364, 370-78 (D.N.J. 2004) (applying New-Jersey choice of law and rejecting application of New Jersey law as the principal place of business of the defendant to the entire class).
101. Int'l Union, 929 A.2d at 1085-89.
102. In a footnote, the New Jersey Supreme Court stated that [a]lthough defendant advances strong arguments in support of its appeal from the Appellate Division's choice of law analysis, in light of our decision on predominance and superiority, we express no view on the Appellate Division's choice of law reasoning or the result it reached as to the applicability of our law to all members of a nationwide class. Id. at 1086 n.3.
103. 879 N.E.2d 910, 922 (Ill. 2007).
104. Barbara's Sales, Inc. v. Intel Corp., 857 N.E.2d 717, 724 (Ill. App. Ct. 2006).
105. Id. at 722.
106. Id. (emphases added).
107. Barbara's Sales, 879 N.E.2d at 921.
108. Id. at 922 (citations omitted).
109. Larry Kramer, Choice of Law in Complex Litigation, 71 N.Y.U. L. REV. 547, 549 (1996) ("Because choice of law is part of the process of defining the parties' rights, it should not change simply because, as a matter of administrative convenience and efficiency, we have combined many claims in one proceeding . . . .").
110. See Richard A. Nagareda, Aggregation and Its Discontents: Class Settlement Pressure, Class-Wide Arbitration, and CAFA, 106 COLUM. L. REV. 1872, 1911 (2006) [hereinafter Nagareda, Aggregation and Its Discontents] (noting that a choice of law rule for aggregate litigation is problematic because it uses the aggregate nature of the action to alter substantive law);
111. see also Richard A. Nagareda, Bootstrapping in Choice of Law After the Class Action Fairness Act, 74 UMKC L. REV. 661 (2006);
112. Richard A Nagareda, The Preexistence Principle and the Structure of the Class Action, 103 COLUM. L. REV. 149, 189-98 (2003).
113. But cf. Elizabeth J. Cabraser, The Manageable Nationwide Class: A Choice-of-Law legacy of Phillips Petroleum Co. v. Shutts, 74 UMKC L. REV. 543, 567 (2006) ("It is particularly important, at this juncture, that the federal courts . . . recogniz[e] that the supposed 'precedents' of earlier decision [sic] denying such certification may be[,] as a matter of procedural justice, obsolete . . . .").
114. Harold P. Southerland, Sovereignty, Value Judgments, and Choice of Law, 38 BRANDEIS L.J. 451, 455 (2000).
115. I have written about these issues in a quite different context. See Linda Silberman & Karin Wolfe, The Importance of Private International Law for Family Issues in an Era of Globalization: Two Case Studies - International Child Abduction and Same-Sex Unions, 32 HOFSTRA L. REV. 233, 233 (2003);
116. Linda Silberman, Same-Sex Marriage: Refining the Conflict of Laws Analysis, 153 U. PA. L. REV. 2195, 2197 (2005).
117. Professor Kramer directs his concerns largely to the federal courts, which are bound to apply state law, including choice of law. He emphasizes that the federal courts ought not to make independent choice of law rules or manipulate state choice of law. He also has some advice for the state courts - that is, that they should use the same choice of law rules in complex and ordinary cases, and not use consolidation to change the applicable law. See Kramer, supra note 107, at 549-50.
118. There are certain nuanced aspects to this issue, such as whether the plaintiff or the defendant has the burden of demonstrating variations in the competing state laws. See Woolley, supra note 27, at 1739-41 & nn.92-103.
119. That is also the view taken by the American Law Institute. See ALI, supra note 49, § 2.05 & Reporters' Notes cmt. a ("This Section as a whole proceeds on the premise that choice of law is a dimension of the larger inquiry into the constraints imposed by substantive law upon aggregation, not a matter of procedural choice akin to the decision to aggregate itself.").
120. See David L. Shapiro, Class Actions: The Class as Party and Client, 73 NOTRE DAME L. REV. 913, 918-19 (1998).
121. Silberman, supra note 3, at 211 (suggesting that the entity model only be used "within a particular contextual and substantive framework").
122. DAVID F. CAVERS, THE CHOICE- OF-LAW PROCESS 39 (1965).
123. Indeed, some might argue that choice of law rules as a whole should have been entrusted to the U.S. Supreme Court or Congress to fulfill the role of neutral umpire in competition among states for application of their particular rules. See Letter from James Madison to George Washington (Apr. 16, 1787), reprinted in JAMES MADISON, THE FORGING OF AMERICAN FEDERALISM 184-87 (S. Padover ed., 1953),
124. quoted in ANDREAS F. LOWENFELD, CONFLICT OF LAWS 377 (2d ed. 2002).
125. CAFA provides for original and removal jurisdiction in federal court for class claims based on state law whenever there is minimal diversity between any plaintiff class member and any defendant and the aggregate amount in controversy exceeds five million dollars. 28 U.S.C. § 1332(d)(2)(A) (Supp. V 2005). Class members are permitted to aggregate their claims. Id. § 1332(d)(2). Any defendant has the right to remove the action from state to federal court. Id. § 1453(b). However, the district court will not hear the action if a substantial majority of the proposed plaintiff class are citizens of the same state as all primary defendants. Id. § 1332(d)(4)(B). The district court also must decline jurisdiction if a substantial majority of the plaintiff class is from the same state as one primary defendant when the principal injuries occurred in that state. Id. § 1332(d)(4)(A).
126. For a discussion of these various proposals, see supra note 13.
127. 151 CONG. REC. S1166 (Daily ed. Feb. 9, 2005); see also supra note 13 (discussing various proposals).
128. See, e.g., S. REP. NO. 109-14, at 62 (2005), reprinted in 2005 U.S.C.C.A.N. 3, 58 (concluding that federal courts will not "botch these critical choice-of-law issues" as some state courts have done); see also Woolley, supra note 27, at 1726-47 (questioning whether federal jurisdiction is appropriate to correct choice of law abuses).
129. This may be a slight overstatement, since defendants might choose not to remove if a case falling within CAFA is brought in state court. Since absent class members do not have a right to remove under CAFA, there may be some cases that meet the requirements of CAFA that would not be removed. This would be particularly true in settlement class actions, but in such cases choice of law as a practical matter does not play a role. For further discussion of the impact of CAFA on absent class members, see Tobias Barrington Wolff, Federal Jurisdiction and Due Process in the Era of the Nationwide Class Action, 156 U. PA. L. REV. 2035 (2008). Also, to the extent that some remands under CAFA are discretionary, certain nationwide class actions would be remanded back to state court. But in this situation, it could be argued that when a case does not warrant federal treatment under CAFA and is properly heard by the state court, the state choice of law rule is also proper.
130. "Federal common law" on choice of law already does exist in a number of areas. See, e.g., Eli Lilly Do Brasil, Ltda. v. Fed. Express Corp., 502 F.3d 78, 80-89 (2d Cir. 2007) (liability of air carriers); Lien Huynh v. Chase Manhattan Bank, 465 F.3d 992, 997 (9th Cir. 2006) (foreign banking transactions to which a U.S. corporation is a party).
131. See Richard L. Marcus, Assessing CAFA's Stated Jurisdictional Policy, 156 U. PA. L. REV. 1765, 1815 (2008).
132. But see Griffin v. McCoach, 313 U.S. 498, 503-04 (1941) (holding that a federal court is required to follow the state choice of law rule in a diversity action even though the federal court was exercising nationwide service of process under the Federal Interpleader Act and the state court would not have had a similar reach). However, Griffin is not a serious obstacle because a federal choice rule there would have made federal interpleader a device for interstate forum shopping. See RUSSELL J. WEINTRAUB, COMMENTARY ON THE CONFLICT OF LAWS 724-25 (5th ed. 2006).
133. Moreover, Griffin has been extensively criticized. See ALI, STUDY OF THE DIVISION OF JURISDICTION BETWEEN STATE AND FEDERAL COURTS 211-12, 402-03 (1969);
134. Charles E. Clark, State Law in the Federal Courts: The Brooding Omnipresence of Erie v. Tompkins, 55 YALE L.J. 267, 286-88 (1946).
135. See Samuel Issacharoff, Getting Beyond Kansas, 74 UMKC L. REV. 613 (2006) [hereinafter Issacharoff, Getting Beyond Kansas];
136. Samuel Issacharoff, Settled Expectations in a World of Unsettled Law: Choice of Law After the Class Action Fairness Act, 106 COLUM. L. REV. 1839 (2006) [hereinafter Issacharoff, Settled Expectations].
137. See Issacharoff, Getting Beyond Kansas, supra note 126, at 616-19; Issacharoff, Settled Expectations, supra note 126, at 1870-71.
138. 28 U.S.C. § 1652 (2000). The Rules of Decision Act requires that the laws of the several states apply, but never says which state law.
139. This example is found in LINDA J. SILBERMAN, ALLAN R. STEIN & TOBIAS BARRINGTON WOLFF, CIVIL PROCEDURE: THEORY AND PRACTICE 1052-53 (2d ed. 2006).
140. Id. at 1053.
141. Id. (citing 28 U.S.C. § 1332(d)(3)-(4) (Supp. V 2005)).
142. Of course, this is a case where Texas law would likely be selected as the applicable law regardless of whether a state or federal choice of law rule was used.
143. See Issacharoff, Settled Expectations, supra note 126, at 1870, 1861-71.
144. Stephen B. Burbank, Aggregation on the Couch: The Strategic Uses of Ambiguity and Hypocrisy, 106 COLUM. L. REV. 1924, 1943 & n.129 (2006) ("[T]he Act does not change the application of the Erie Doctrine, which requires federal courts to apply the substantive law dictated by applicable choice of law principles in actions arising under diversity jurisdiction." (quoting S. REP. NO. 109-14, at 49 (2005), reprinted in 2005 U.S.C.C.A.N. 3, 46)).
145. European Economic Community, Convention on the Law Applicable to Contractual Obligations, opened for signature June 19, 1980, 1980 O.J. (L 266) 1.
146. See supra text accompanying notes 5-6.
147. See, for example, Farmers Ins. Exch. v. Leonard, 125 S.W.3d 55 (Tex. App. 2003), where, in a breach-of-contract class action, the California-based defendant made the argument that California law would be unfair to plaintiffs. The court noted the irony of the defendant's position and found that the differences between the law of California and other states were minor. Id. at 64-65. The court then affirmed certification of the class. Id. at 71.
148. See, e.g., Harald Koch, Non-Class Group Litigation Under EU and German Law, 11 DUKE J. COMP. & INT'L L. 355, 357-58 (2001) (discussing two models of collective interest representation practiced in EU member states).
149. See, e.g., Barbara's Sales, Inc. v. Intel Corp., 857 N.E.2d 717, 722-23 (Ill. App. Ct. 2006) (holding that the law of the principal place of business of the defendant, California, should apply in order to facilitate certification of consumer class), rev'd, 879 N.E.2d 910 (Ill. 2007); Int'l Union of Operating Eng'rs Local #68 Welfare Fund v. Merck & Co., 894 A.2d 1136, 1148-51 (N.J. Super. Ct. App. Div. 2006) (applying the law of the forum state, New Jersey, because it was the principal place of business of the defendant and New Jersey's deterrent interests were more significant than the interests of the payors' home states), rev'd on other grounds, 929 A.2d 1076 (N.J. 2007).
150. That point is developed by Professor Richard Nagareda in a recent article. Nagareda, Aggregation and Its Discontents, supra note 108, at 1918-22. Although, under Klaxon, a federal court would appear to be obliged to follow the state's law, Professor Nagareda notes that the Supreme Court, in Byrd v. Blue Ridge Rural Electric Cooperative, 356 U.S. 525 (1958), allowed the Erie principle to be overcome in certain situations. With respect to CAFA, it is plausible that because CAFA "effectively shuts down the state court with regard to class certification," Klaxon should bow to Congress's notion that aggregation should not affect a substantive remedy. Nagareda, Aggregation and Its Discontents, supra note 108, at 1921. This principle, and not federal/state forum shop ping, is arguably the problem that the Act aimed to remedy. Id. at 1918-22; see also Burbank, supra note 134, at 1950-51 ("[W]here state choice of law doctrine is materially influenced by state policy reflecting a bias in favor of aggregate litigation, CAFA's jurisdictional provisions - reflecting (most charitably) a policy to enable aggregation decisions unaffected by that bias - may plausibly be thought, in the words of the Rules of Decision Act, to require otherwise than that such state law applies."). I do not think the suggestion offered by Professors Nagareda and Burbank is a workable one because it will always be unclear when the state choice of law rule reflects a "bias in favor of aggregate litigation." The application of a federal choice of law norm offers a more certain and clearer solution.
151. ALI, supra note 10.
152. See, e.g., Phaedon John Kozyris, Conflicts Theory for Dummies: Après le Deluge, Where Are We on Producers Liability?, 60 LA. L. REV. 1161, 1173-81 (2000).
153. See In re The Prudential Ins. Co. of Am. Sales Practices Litig., 962 F. Supp. 450, 467-68 (D.N.J. 1997), aff'd in part, 148 F.3d 283 (3d Cir. 1998); see also Fruehwald, supra note 2, at 359-60 ("The use of subclasses may not be as difficult as some commentators and judges claim.").
154. See, e.g., ALI, supra note 49, § 2.12 (Trial Plan for Aggregation). Although the preliminary proposals have a definite pro-aggregation bias, they are directed to the management of class actions and not to a reformulation of choice of law rules for aggregate litigation.
155. 230 F.R.D. 61 (D. Mass. 2005).
156. Id. at 82. Because the Massachusetts court was sitting as an MDL forum, there was an open question as to whether the Massachusetts conflicts rules were appropriate for the transferred cases. The usual rule is that the choice of law rules of the transferor state should apply. See Grispino v. New Eng. Mut. Life Ins. Co., MDL No. 1105, 2003 U.S. Dist. LEXIS 25664, at *9-10 (D. Mass. May 20, 2003), aff'd on other grounds, 358 F.3d 16 (1st Cir. 2004).
157. In re Pharm. Indus. Average Whoksale Price Litig., 230 F.R.D. at 83.
158. Id.